In re the People

164 A.D. 586, 150 N.Y.S. 398, 1914 N.Y. App. Div. LEXIS 8519

Opinions

Ingraham, P. J.:

On the 16th day of December, 1912, an order was duly made in this proceeding directing the Superintendent of Insurance to take possession of the property and liquidate the business of the Empire State Surety Company, pursuant to section 63 of the Insurance Law. (See Consol. Laws, chap. 28 [Laws of 1909, chap. 33], § 63, added by Laws of 1909, chap. 300, as amd. by Laws of 1912, chap. 217.)

* Among other things, that order provided: “ That until the further order of this court, the policyholders and creditors of the said corporation and all other persons be, and they hereby are, enjoined and restrained from bringing * * * any action at law or suit in equity or special proceeding against the said corporation; and from making or executing any levy upon the property of the said corporation, or in any way interfering with the said Superintendent of Insurance, or his successor in office, in his or their possession, control and management of the property of the said corporation or in the discharge of his or their duties as liquidators thereof.” Prior to the 15th day of March, 1913, the appellant filed with the Superintendent of Insurance a claim for materials furnished to E. H. Eichardson & Son, Hampton, Va. On the 28th of April, 1913, the order of the 16th of December, 1912, containing the said injunction was duly served upon the appellant. On the 27th of December, 1913, there was filed in a certain proceeding instituted in the United States District Court for the Western District of Virginia a petition of the appellant, whereby the petitioner prayed that its claim of $1,500 he allowed as a claim in the State of Virginia outstanding against the said Empire State Surety Company, and, therefore, entitled to he paid out of the proceeds of the funds deposited by said Empire State Surety Company as a condition of doing business within that State. This proceeding was thereupon instituted to punish the appellant for contempt for violation of the injunction of the 16th of December, 1912.

By filing its claim with the Superintendent of Insurance against the insolvent corporation, the liquidation of which this State had undertaken, and by the service of the order of this court of the 16th of December, 1912, upon the appellant, the Supreme Court acquired jurisdiction over the appellant, and it was bound to obey its orders. Whether that order was or was not improvidently granted is not in controversy in this proceeding. The only question is whether the court had jurisdiction to make the order, and, if it had, whether the appellant, had violated the injunction therein contained.

I have no doubt but that the court had jurisdiction to make the order. The said Empire State Surety Company was a New York corporation. The Supreme Court of this State had instituted a proceeding to liquidate its business and apply its assets to the payment of its debts. All the property of the corporation, wherever situated, thereby vested in the Superintendent of Insurance for the purpose of liquidation. The Supreme Court had jurisdiction to take possession of its assets and direct their application to the creditors of the corporation, and it had jurisdiction to restrain the creditors of the corporation from taking proceedings against it for the purpose of recovering their claims, and to restrain the creditors from interfering with the possession of the property by the Superintendent of Insurance. It may be that, upon a proper application to the court, it might have relieved the appellant from the injunction and allowed it to file the claim against the said company in Virginia. But the appellant, if it violated the order of the Supreme Court, was liable, in this State, at any rate, for the penalty which the statute imposes for a violation of its orders. The Superintendent of Insurance was entitled to receive from the State of Virginia the proceeds of the funds deposited by the said Empire State Surety Company in the State of Virginia, in excess of any liens to which it was subject. An attempt by a creditor of the said company to obtain a lien upon that fund in the State of Virginia was an attempt to deplete the property of the said company which would come into the possession of the liquidator for the purpose of being applied to the payment of the corporation debts.

I do not think that the question whether this injunction was too broad, or should not have enjoined the appellant from taking this proceeding to enforce its claim, can be considered on this appeal. The questions, it seems to me, are whether the court had jurisdiction — which I think it clearly had; whether the court acquired jurisdiction over the person of the appellant— which I think it clearly did; whether the appellant, by filing its claim in the United States District Court for the Western District of Virginia, violated the provisions of this injunction order—which I think it clearly did. The appellant was, therefore, in contempt, and the court has the power to punish it for such contempt.

By section 770 of the Judiciary Law (Consol. Laws, chap. 30; Laws of 1909, chap. 35) the court was authorized to determine whether the accused had committed the offense charged, and was then directed to make a final order providing that it be punished by fine or imprisonment. Section 773 of the Judiciary Law provides: “Where it is not shown that such an actual loss or injury has been produced, a fine must he imposed, not exceeding the amount of the complainant’s costs and expenses, and two hundred and fifty dollars in addition thereto * *

I do not see in the record any statement that tends to show that the Superintendent of Insurance has been occasioned any loss or injury by the institution of this proceeding in violation of the injunction, nor does it appear that he was entitled to any costs or expenses of the proceeding.

I think, therefore, the order should be modified by fixing the fine at the sum <of $250, and striking out the sum of $50 as compensation to the petitioner, and as so modified affirmed, but without costs.

Scott, Clarke and Dowling, JJ., concurred; Hotchkiss, J., dissented.

Since amd. by Laws of 1913, chap. 29.—[Rep.